If an economist wants to make a prediction about the effects of a change in disposable income on the change in consumption spending based on historical data, she must assume that
a. the future will closely resemble the past.
b. consumption and disposable income will be negatively related.
c. the consumption function will have a downward slope.
d. as disposable income increases, consumer spending will remain constant.
a
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The "stagflation" of the 1970s ________ Keynesian macroeconomics until the Keynesians started to build the consequences of changing inflationary expectations and ________ shocks into their models
A) reinforced the dominance, supply B) reinforced the dominance, demand C) deepened the eclipse, supply D) deepened the eclipse, demand
If a $50 billion decrease in investment spending causes income to decline by $50 billion in the first round of the multiplier process and by $25 in the second round, the multiplier in the economy is:
A. 2. B. 3.33. C. 5. D. 10.